Valero discusses RFS, RIN policy during investor call

Valero Energy Corp. has released third quarter financial results, reporting that its ethanol segment earned $82 million of operating income during the three-month period, down from $106 million during the same period of last year. Valero primarily attributed the decrease to higher corn prices and lower distillers grain prices that pressured margins.

The company said third quarter ethanol production volumes averaged 4 million gallons per day, up 217,000 gallons per day when compared to the third quarter of 2016.

Joseph Gorder, chairman, president and CEO, said the fight over the RFS “is far from over.” Regarding RINs, he also noted that Valero is continuing to invest in assets that allow the company to blend more and export more. “We’ve got a very strong focus on logistics and on the wholesale market expansion,” he said.

Another Valero official discussed the letter U.S. EPA Administrator Scott Pruitt sent to a group of Midwestern senators last week. In that letter, Pruitt indicated the EPA is expected to set final 2018 renewable volume requirements (RVOs) at or above proposed levels. Pruitt also said the EPA would maintain the RFS point of obligation, noted the agency would not pursue regulations aimed at allowing RINs to be attached to exported ethanol gallons, and addressed the possibility of expanding the Reid vapor pressure (RVP) waiver to ethanol blends above E10.

The Valero official expressed disappointment in the letter. He noted that the White House, EPA and members of Congress have acknowledged that high RIN prices are a problem for refiners. He also noted that Valero will continue to pursue its legal, regulatory and legislative options.

Valero currently owns 11 ethanol plants with a combined capacity of 1.4 billion gallons per year. In addition to ethanol, the company also refines oil into gasoline, diesel and jet fuel, and produces a variety of specialty products.

Overall, Valero reported net income attributable to Valero stockholders of $841 million, or $1.91 per share, up from $613 million, or $1.33 per share, during the same period of last year. Third quarter 2016 adjusted net income attributable to Valero stockholders is $571 million, or $1.24 per share.